Be on guard against identity theft on client tax returns
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A number of recent reports about fraudulent federal income tax returns being filed by thieves using individuals’ social security numbers (SSN) has led the IRS to issue tips for tax preparers on how to spot fraudulent activity and what to do about it.

According to the IRS newsletter issued Tuesday, March 3, "you may be unaware your client is a victim of identity theft until you attempt to file the tax return and it is rejected. Your client also may receive an IRS notice regarding:

  • More than one tax return was filed using your client’s SSN,
  • Your client has a balance due, refund offset or a collection action taken for a year in which your client did not file a tax return,
  • IRS records indicate your client received wages from an unknown employer,
  • A business client may receive an IRS letter about an amended tax return, fictitious employees or about a defunct, closed or dormant business.”

If your client’s SSN has been compromised, whether from a data breach, computer hack or stolen wallet, and he or she has reason to believe there is a risk of tax-related identity theft, you should take these steps, according to the IRS:

  • If your client received an IRS notice, respond immediately to the telephone number provided.
  • Complete Form 14039, Identity Theft Affidavit. Fax or mail to the IRS according to the instructions.
  • To inquire about specific client return information, you must have a power of attorney on file, and you must authenticate your identity with the IRS customer service representative.

The IRS has a number of resources available for tax preparers to help thwart tax fraud. Click here to access a page with links to those resources.